RE: Lotus five-car future is canned

RE: Lotus five-car future is canned

Author
Discussion

Captain Muppet

8,540 posts

264 months

Monday 13th August 2012
quotequote all
Scuffers said:
Captain Muppet said:
Scuffers said:
I read somewhere that they have managed to cut Lotus day to day running costs down to £5M a month (from £7M+)

kind of put's it in context, how many cars do you need to make/sell to cover £5M/month?
No cars at all if you have £60M in engineering contracts from third parties.

I've worked with a few ex-Lotus engineers who go mental when people forget about the other side of the business.
I am sure they are, but I do not believe Lotus Engineering have £60M worth of contracts on an annual basis.

Lotus Engineering had had an uphill battle ever since Proton brought them, they have lost a lot of their staple diet work to others.

and remember, this is 60+M to effectively stand still....
So you don't actually know? Me either.

Scuffers

20,887 posts

273 months

Monday 13th August 2012
quotequote all
Captain Muppet said:
So you don't actually know? Me either.
nope, I don't...

(although I would suggest not as to get £60+M profit your probably talking >£300m worth of contracts)

Captain Muppet

8,540 posts

264 months

Monday 13th August 2012
quotequote all
Scuffers said:
Captain Muppet said:
So you don't actually know? Me either.
nope, I don't...

(although I would suggest not as to get £60+M profit your probably talking >£300m worth of contracts)
I would suggest that to cover £60M running costs you just need to take £60M in contracts.
To cover your costs you don't need any profit at all.

If you are only making £60M profit on >£300M of work with £60M in costs I'd have a word with your accountant.

Scuffers

20,887 posts

273 months

Monday 13th August 2012
quotequote all
Captain Muppet said:
Scuffers said:
Captain Muppet said:
So you don't actually know? Me either.
nope, I don't...

(although I would suggest not as to get £60+M profit your probably talking >£300m worth of contracts)
I would suggest that to cover £60M running costs you just need to take £60M in contracts.
To cover your costs you don't need any profit at all.

If you are only making £60M profit on >£300M of work with £60M in costs I'd have a word with your accountant.
sorry?

if it costs you £60m to pay the bills, and you only have £60M of work (at invoice value) then you are screwed.

DonkeyApple

54,923 posts

168 months

Monday 13th August 2012
quotequote all
Captain Muppet said:
Scuffers said:
Captain Muppet said:
So you don't actually know? Me either.
nope, I don't...

(although I would suggest not as to get £60+M profit your probably talking >£300m worth of contracts)
I would suggest that to cover £60M running costs you just need to take £60M in contracts.
To cover your costs you don't need any profit at all.

If you are only making £60M profit on >£300M of work with £60M in costs I'd have a word with your accountant.
Yes and no. This calc ignores the cost of the new contracts. If costs of current business is £60m per annum then these costs are likely to increase with contract/workload.

Captain Muppet

8,540 posts

264 months

Monday 13th August 2012
quotequote all
Scuffers said:
Captain Muppet said:
Scuffers said:
Captain Muppet said:
So you don't actually know? Me either.
nope, I don't...

(although I would suggest not as to get £60+M profit your probably talking >£300m worth of contracts)
I would suggest that to cover £60M running costs you just need to take £60M in contracts.
To cover your costs you don't need any profit at all.

If you are only making £60M profit on >£300M of work with £60M in costs I'd have a word with your accountant.
sorry?

if it costs you £60m to pay the bills, and you only have £60M of work (at invoice value) then you are screwed.
I was assuming the bills include staff wages, buildings, taxes, IT, all the overheads.

Engineering consultancy is selling brain time with boffins. The end product is intelectual property, not things.

Scuffers

20,887 posts

273 months

Monday 13th August 2012
quotequote all
Captain Muppet said:
Scuffers said:
Captain Muppet said:
Scuffers said:
Captain Muppet said:
So you don't actually know? Me either.
nope, I don't...

(although I would suggest not as to get £60+M profit your probably talking >£300m worth of contracts)
I would suggest that to cover £60M running costs you just need to take £60M in contracts.
To cover your costs you don't need any profit at all.

If you are only making £60M profit on >£300M of work with £60M in costs I'd have a word with your accountant.
sorry?

if it costs you £60m to pay the bills, and you only have £60M of work (at invoice value) then you are screwed.
I was assuming the bills include staff wages, buildings, taxes, IT, all the overheads.

Engineering consultancy is selling brain time with boffins. The end product is intelectual property, not things.
yes and no.

you still have costs associated with projects, like electricity to run the dyno cells, raw materials, consumables, etc. that you would not otherwise be using, it's a long way from just charging for peoples time etc.

otolith

55,899 posts

203 months

Monday 13th August 2012
quotequote all
When I worked for an engineering consultancy (civil, but they tackled all sorts of projects and had every kind of engineer going along with geologists, ecologists, programmers, etc) their main concern was utilisation. I think Lotus maybe makes more use of contractors than they did, but the thing they most wanted to avoid was paying engineers to twiddle their thumbs.

Ozzie Osmond

21,189 posts

245 months

Monday 13th August 2012
quotequote all
Which simply confirms that, more than anything else, Lotus need a car on sale which will actually be bought by living and breathing customers in significant numbers.

Twincam16

27,646 posts

257 months

Monday 13th August 2012
quotequote all
Ozzie Osmond said:
Which simply confirms that, more than anything else, Lotus need a car on sale which will actually be bought by living and breathing customers in significant numbers.
If that Autocar article has any truth to it, those bestsellers might actually turn out to be Infinitis and Alpines.

Could be the start of a beautiful friendship.

b0rk

2,289 posts

145 months

Monday 13th August 2012
quotequote all
Twincam16 said:
If that Autocar article has any truth to it, those bestsellers might actually turn out to be Infinitis and Alpines.

Could be the start of a beautiful friendship.
If the sales volumes are decent then the second gen product would IMHO end up going in house and if they're bad the car would likely get canned.
2000 units pa for Renault would equal current "own brand" production add Infiniti at the same volume and Renault/Nissan alliance would be the largest single customer by quite a stretch. This would actually be pretty bad for Lotus as it would rob them of production capacity short term whilst leaving them vulnerable to a sudden downturn in work at the end of model life if the contract is not renewed.

RTH

1,057 posts

211 months

Tuesday 14th August 2012
quotequote all
Clearly with the outlook now facing the world economies, Lotus need to very much scale back costs.
The 'Lotus Cortina' era was a joint venture which was very beneficial to Lotus in revenue and publicity terms and to Ford in image/profile/credibility terms which boosted sales of mid range models, as did the Cooper Car Co, with BMC.
Another such venture surely an obvious aim.
Stick with what you were good at is a good motto. A 3 car range of exciting looking light basic simple uncluttered cars giving driver pleasure at modest prices.
They are not Porsche BMW Jaguar, should aim to be rather different -look to sell 4000 cars a year, something they did achieve in '69-73. Design is all important in terms of appeal, cost of ownership and cost of manufacture.

Twincam16

27,646 posts

257 months

Tuesday 14th August 2012
quotequote all
RTH said:
Clearly with the outlook now facing the world economies, Lotus need to very much scale back costs.
The 'Lotus Cortina' era was a joint venture which was very beneficial to Lotus in revenue and publicity terms and to Ford in image/profile/credibility terms which boosted sales of mid range models, as did the Cooper Car Co, with BMC.
Another such venture surely an obvious aim.
Stick with what you were good at is a good motto. A 3 car range of exciting looking light basic simple uncluttered cars giving driver pleasure at modest prices.
They are not Porsche BMW Jaguar, should aim to be rather different -look to sell 4000 cars a year, something they did achieve in '69-73. Design is all important in terms of appeal, cost of ownership and cost of manufacture.
I'd agree - which is why they need a decent-selling (but currently unsporty) range to latch onto.

Difference between now and '69-'73 is the introduction of VAT. Back then, when it was Purchase Tax that only applied to complete cars, they could get away with selling them as kits or part-built (sometimes just needed cursory things attaching, like wheels and seats) for a lot less than a factory car would set you back. In short, Lotus collected all the profit and the government got nothing. Nowadays they'd swipe a fair amount of every purchase.

skwdenyer

16,181 posts

239 months

Tuesday 14th August 2012
quotequote all
Twincam16 said:
I'd agree - which is why they need a decent-selling (but currently unsporty) range to latch onto.

Difference between now and '69-'73 is the introduction of VAT. Back then, when it was Purchase Tax that only applied to complete cars, they could get away with selling them as kits or part-built (sometimes just needed cursory things attaching, like wheels and seats) for a lot less than a factory car would set you back. In short, Lotus collected all the profit and the government got nothing. Nowadays they'd swipe a fair amount of every purchase.
Sales tax was replaced by VAT. However, for cars, so-called 'Special Car Tax' was introduced, which was added on top. That wasn't abolished until IIRC 1992. I believe that SCT was not payable on kits, so (some of) the tax advantages of kit sale persisted, or am I mis-remembering how SCT operated? But VAT meant they were in any case more expensive than hitherto.